Government tells defence and treasury ministries, national bank and other agencies to formulate rescue plan this month
Varig's increasingly precarious financial position has spurred the Brazilian government to seek a viable solution to prevent the country's major airline folding.
The airline has improved its financial performance significantly since signing a major codeshare deal with TAM, but there are fears that Varig's $2 billion global debt will lead to its closure early next year.
Defence and treasury ministries, along with Brazil's state development bank BNDES and other federal agencies, have been instructed by the government to present a rescue plan before the end of August. Removal of FRBPar as the Varig Group's governing body is already one of the key proposals, as is the ruling out of redundancies.
Several options are being examined, although the one reportedly favoured by the Brazilian government essentially calls for the outright transfer of Varig to its leading creditors under the supervision of the BNDES. According to government sources, several local investors have indicated their interest in acquiring control of Varig - if the Brazilian government is willing to pardon the existing $1.1 billion tax debt held against the airline.
Varig has taken the first of four ex-Iberia Boeing 757-200s it is leasing this year for South American routes and is negotiating for two ex-United Airlines Boeing 777-200ERs to replace two MD-11s being converted to freighters for VarigLog.
JACKSON FLORES / RIO DE JANEIRO
Source: Flight International
